Refinery wars: China and India win; South Korea, Japan and Singapore lose
Given the scarcity of detailed official data on oil product imports and exports among many Asian countries, it’s nigh impossible to build a completely accurate picture of the likely winners and losers.
However, detailed data is provided by China on the export destinations of its product exports, and Australia, the region’s biggest importer of refined fuels, also gives a country-by-country breakdown of its imports.
The overall picture for Asia’s refiners is that profit margins ments of gasoline.
Singapore is the region’s main trading hub and the Chinese exports to the island state are almost certain to be re-exported to other countries.
LAUNCESTON, Australia: There is little doubt that China’s surging exports of refined fuels have cut profit margins for Asia’s refiners, but the pain is unlikely to be shared equally across all the region’s exporters of oil products.
an average of 167,800 bpd in 2015- 16, while Singapore’s dropped to 86,795 bpd from 135,700 bpd and Japan’s from 121,700 bpd to 86,000 bpd.
Looking specifically at diesel, the main product that Australia imports given its reliance on the fuel for powering the country’s mining industry, and a similar pattern emerges.
Australia bought 37,608 bpd of diesel from China in June alone, versus an average 10,511 bpd for the year to June 30.
Shipments from South Korea to Australia dropped to 46,963 bpd in June from the 2015-16 average of 71,496 bpd, Singapore declined to 52,731 bpd from 80,444 bpd and Japan to 64,707 bpd from 68,000 bpd.
While Australia’s three traditional suppliers of refined products all appear to be losing market share, it’s not just China that is gaining.
Australia bought 47,900 bpd of diesel from India in June, up from the 2015-16 average of 30,000 bpd.
With both China and India gaining increased shares of Australia’s open and competitive refined fuels market, this would seem to indicate that they are more competitive than refineries in South Singapore.
Given both India and China have the most modern and presumably cost-efficient refineries in the region, it makes sense that they’re able to be more competitive.
China’s overbuilding of refinery capacity will continue to act as a disruptor in Asia’s fuel markets, making profits harder to come by and forcing refiners to focus on cost-cutting and flexibility in marketing in order to prosper. Korea, Japan and — Clyde Russell is a Reuters market analyst. The views expressed are his own.